stratgic mgt.ppt

8/14/2019 Stratgic Mgt.ppt

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Dr. Santosh Kumar, PGDHM, MPhil, PhD.Associate Professor

IIHMR, Jaipur

S TRATEGIC M ANAGEMENT


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COURSE O BJECTIVES

What is the strategy?What is strategic management?Why strategic management?Who does strategic management?What is Strategic PlanningHow to do the strategic management ?


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Before we discuss the strategic management, justthink about your self when you passed yourMBBS/MD.What other degree(s) and training(s) did youracquire after your MBBS /MD ?Why did you acquire these degrees ?

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Somehow there are organizations that effectivelymanage change, continuously adapting theirbureaucracies, strategies, systems, products,services and cultures to survive the shocks andprosper from the forces that decimate others . . . theyare the masters of what I call renewal.

-Rob ert H. Waterm an, Jr.

The Renew al Facto r

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What Does Strategy Mean?

S TRATEGY ?


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Greek Word STRATEGO meaning to plan thedestruction of ones enemies through effective use

of resources

Hence, a lot of term commonly used in relation

to strategy - objectives, mission, strengths,weaknesses - were developed by the military.

WHAT DOES S TRATEGY MEAN?


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Goal

Measures

Resources


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It is a means to reach or achieve the vision, thegoal

It is the means by which organizationsdifferentiate itself with others

It is the means by which organizations can positions itself between its external and internal

environments

Strategy is to the organization what personalityis to the person



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Hospital without a strategy is like a shipwithout rudder going around in circles.

A firm without a strategy like Columbus like

when he went to search for America. Whenhe left Europe he did not know where he isgoing, when he reached America he did notknow where he was and when he returnedhe could not tell where he went. A hospitalmanager must know where it is leading andwhy it is going?

A job of manger is to ..9


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WHAT DOES A STRATEGY LOOK

LIKE?

It differentiates the hospital from others and /orgives distinct competitive advantage.Operational efficiency: Cost efficiency,

Innovations (in product, delivery, packaging etc.)Reverse InnovationFocus on Prevention of careFocus of on Primary healthcare

WHOs focus on elderly and patient safety Day Care Surgery

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LIKE?

The San Jose Museum of Modern Art is a relativelynew institution. They chose an innovativeacquisition strategy in pursuit of their mission toin crease opportunities to experience world class art for their community: they chose to rent acollection, rather than buy one. Rather than slowlyaccumulate a collection, the traditional strategy forart museums, San Jose negotiated with the

Museum of Modern Art in New York (which is onlyable to display some 10 percent of its collection atanyone time) to borrow a museum full of art on arotating basis, drawing on the best collection in theworld.

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LIKE?

The mission of the NAMES Project Foundation, sponsor of the AIDS Memorial Quilt, is to help bring an end to the AIDSepidemic. In addition to memorializing the victims of AIDS anddrawing public attention to the AIDS epidemic, the Quiltdisplays are designed to carry prevention messages as well.Early on, the NAMES Project organized public displays of theQuilt allover the country. In the past few years however, theorganization was able to adapt its delivery strategy in order toreach more people. Rather than producing all communitydisplays each year through its own network, the organization

now also recruits collaborative hosts in high schools,corporations, communities of faith, and elsewhere which allowNAMES to display the Quilt in three to four times as manylocations each year.

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LIKE?

One local Humane Society provided a wide rangeof services, including shelter and new homes forstray pets, a spay and neuter clinic, and euthenasiafor unwanted animals. After many years spentcaring for neglected animals, the society shifted itsstrategy toward prevention. To implement thestrategy all programs were instructed to developand implement an education component to their

service, and the staff increased their efforts to passlegislation designed to prevent unwanted pets andanimal abuse.

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S TRATEGY VS . T ACTICS Strategies are forward-looking and long term. Theyprovide the guidelines for growth. With strategies,you are in reality, speaking of future performancegaps and how you are going to overcome them.

Tactics is short termExample: By definition Strategy means to destroyenemy, tactics is how to attack enemy? do we dofrontal attack, or sidewise attack or do we

withdraw?

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Strategic management is

a positioning of an organization between external(?) environment and internal (?) situation

a future-oriented plan that provides decision-making guidelines

In organization by practicing strategic management,managers understand the present, think about the

future, and recognize the signals that suggest change



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Chartering the long term direction of the hospitalSetting the realistic goals and objectives of thehospital

Analyzing both the internal and external environmentFormulating and executing the strategiesCreating a long-term value for stakeholders



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WHY S TRATEGIC M ANAGEMENT ?

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- Demographic Shifts- Population mobility

- Increasing Costs of sophisticated computer basedtechnologies

- Complicated network of cares

- Increasing Competition

- Shortage of resources

- Changing role for public health

.

WHY S TRATEGIC M ANAGEMENT ?


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S TRATEGIC M ANAGEMENT IN THE H EALTH C A RE I NDUSTRY

Strategic management concepts have beenemployed within health care organizations only inthe past 25 to 30 years.Prior to this time, individual health careorganizations had few incentives to employstrategic management because typically they wereindependent, freestanding, not - for - profitinstitutions, and health services reimbursement was

on a cost - plus basis.

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WHAT ARE THESE ?1950s

Theory Y

Management byObjectives Quantitative Mgt Diversification

1960s

Managerial Grid

T-Groups Matrix Management ConglomerationCentralization/Decentralization s

1970

Zero-Based Budgets

Participative Mgt Portfolio Mgt Quantitative MBAs

1980s Theory Z One-Minute

Managing

Organization Culture Intrapreneuring Downsizing MBWA (Mgt by

Wandering Around) TQM/CQI

1990s Customer Focus Quality Improvement Reengineering

Benchmarking Resource-Based View

2000s Six Sigma Balanced Score Card Transformational

Leadership Self-Managed Teams Dynamic Capabilities Virtual Organizations Blue Oceans 20


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WHEN S TRATEGY NOT NEEDED ?

When we have a tons of money to throw awayWhen no competition/No challengeMonopoly situations

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S TRATEGIC P LANNING

Although Strategic Planning is sometimes usedinterchangeably with strategic management, theterm strategic planning is actual process of creatingthe strategy.The development of strategic management beginswith long term planning called strategic planning.Long - range planning developed in the 1950s inmany organizations because operating budgetswere difficult to prepare without some idea of futuresales and the flow of funds.Post - WWII economies were growing and thedemand for many products and services was

accelerating.

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Long - range forecasts of demand enabledmanagers to develop detailed marketing anddistribution, production, human resources, andfinancial plans for their growing organizations.The objective of long - range planning is to predictfor some specified time in the future the size ofdemand for an organization s products andservices and to determine where demand will occur.

Many organizations have used long - rangeplanning to determine facilities expansion, hiringforecasts, capital needs, and so on.

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As industries became more volatile, long - rangeplanning was replaced by strategic planningbecause the assumption underlying long - rangeplanning is that the organization will continue toproduce its present products and services thus,matching production capacity to demand is thecritical issue.

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However, the assumption underlying strategicplanning is that there is so much economic, social,political, technological, and competitive changetaking place that the leadership of the organizationmust periodically evaluate whether it should evenbe offering its present products and services,whether it should start offering different productsand services, or whether it should be operating and

marketing in a fundamentally different way.

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WHAT S TRATEGIC P LANNING IS NOT

Strategic planning is not forecastingStrategic planning is not the simple application ofquantitative techniques to business planning.Strategic planning is concerned with makingdecisions today that will affect the organization(product line) and its future. Strategic planning does not eliminate risk, it helpsmanagers access the risks they must take bygaining a better understanding of the parametersinvolved in their decisions.


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S IMPLIFIED P ROCESS OF S TRATEGIC P LANNING

The process of strategic planning is a step-by-stepapproach three key questions that lie at the heart ofany business strategy:What are you going to sell?Who are your target customers?How can you beat or avoid your competition?

If you can answer these three questions well, youhave a strategy.


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S IMPLIFIED P ROCESS OF S TRATEGIC P LANNING (C ONT.)

Theres no denying that a simplified processinvolves complex issues.The process involves digesting a lot of informationand requires some fairly difficult analysis.Good strategic planning should be simplified notsimplistic.Good intentions alone does not get the job done.


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S IMPLIFIED P ROCESS OF S TRATEGIC P LANNING (C ONT.)

You need to see it big at first. Start at a high level.Sift through all of the noise to get to the importantdetailsThe next step is do the things that matter very well.Occasionally, go back up to the high level to makesure everything is still on course.


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S IMPLIFIED P ROCESS O F S TRATEGIC P LANNING -S TART BY S TUDYING THE W AY IT IS NOW

You need to gather basic information and factswithout making any judgments.Based on this information you build someassumptions, again without making judgments.This process is the central part of the planningprocess and needs to be reviewed in detailbecause this information is the foundation for allfurther strategy discussions and decisions.


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Data1. External Situation2. Internal Situation3. Capabilities and

competencies

Ideas4. Assumptions

Analysis

5. Strategic assessmentStrategic Issues

Direction6. Strategies

Commitment7. Mission StatementGoalsObjectives

Implementation8. Action Plans9. Budgets10. Schedules


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S IMPLIFIED P ROCESS OF S TRATEGIC P LANNING - H OW IT W ORKS

Planning

Gather InformationAssess CapabilitiesMake AssumptionsMake Strategic AssessmentsFormulate StrategyEstablish Goals and ObjectivesFormulate Tentative Action PlansFinalize Action Plans

Execution

Monitor Developmentsand

Progress


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Sales Plan

TargetAccount Strategy

KeyAccount Strategy

MaintenanceAccount Strategy

Why BotherAccount Strategy

Territory Plans

Key and Target Account Plans

Action Plans

Control & Evaluation

Shorter Term Business PlanMarket Plan

Strategic Planning

TOTAL O RGANIZATIONAL P LANNING

Marketing Information

Strategic

Tactical

Long Term Business Plan


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S TART BY S TUDYING THE W AY IT IS NOW

The course to your vision, like all navigation, startswith a known position.What markets should you pursueWho are your competitorsWhere is your competitive advantageWhat are your strengthsWhat are your weaknesses

Figuring out point A is the first essential step tocharting a course to get to point B. So get yourbearings! Where are you today?


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P

OS

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N

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Which segments /customers will we

concentrate on ?

Whom will wechallenge for thesecustomers?

What incentives will weprovide to get them to buyfrom us rather than fromcompetitors?

CUSTOMERTARGETS

COMPETITORTARGETS

CORESTRATEGY

DEFINING AND SELECTING KEY/TARGET


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BUSINESS STRENGTHS

ACCOUNTATTRACTIVENESS

High

Low

Strong Weak

DEFINING AND SELECTING KEY/TARGETACCOUNTS

Size Growth Profitability Location Purchasing criteria and

processes

Current suppliers Status of customer(prestige)

Product range Product efficacy (the power to produce an effe

) Service quality (inc. distribution) Price Associated services (e.g. Tech advice) Reputation/image Past experience

Quality of sales staff

Invest / Grow SelectivelyInvest

MaintainManage for

Cash /Withdraw

ACCOUNT PORTFOLIO ANALYSIS


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Strong Strength of Position Weak

High

AccountOpportunity

Low

ACCOUNT PORTFOLIO ANALYSIS

Attractiveness:

Accounts are very attractive since they offerhigh opportunity and sales organization hasstrong position.

Sales call strategy: Accounts should receive a high level of salescalls since they are the sales organizationsmost attractive accounts.

Attractiveness:

Accounts are potentially attractive sincethey offer high opportunity, but salesorganization currently has weak positionwith accounts.

Sales call strategy: Selected accounts should receive a highlevel of sales calls to strengthen the salesorganizations position.

KEY TARGET

MAINTENANCE WHY BOTHERAttractiveness:

Accounts are somewhat attractive since salesorganization has strong position, but futureopportunity is limited.

Sales call strategy: Accounts should receive a moderate level ofsales calls to maintain the current strength ofthe sales organizations position. And, effortsshould be made to replace field sales callswith telephone sales.

Attractiveness: Accounts are very unattractive since theyoffer low opportunity and sales organizationhas weak position.

Sales call strategy: Accounts should receive no field sales callsand a minimum of inside sales resources.


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High

A C

C O U N T A T T R A C T I V E N E S S

Low

Strong WeakYOUR STRENGTH OF POSITION

ACCOUNT SEGMENTATION AND PRIORITIZATION

KEY ACCOUNTS

10-20% of your account base

80% of your GP$

Receives less than 50% of yourresources

TARGET ACCOUNTS(Your competitions Key Accounts)

MAINTENANCE ACCOUNTS WHY BOTHER? ACCOUNTS

Gets very little attention


10-15% of your GP$

Receives 30-40% of yourresources


Less than 5% of your GP$

Receives 20-30% of yourresources

Creates 90% of yourheadaches

S l T d S lli g Eff t


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S t r o n g

W e a

k

A C C O U N T

O P P O R T U

N I T Y

Strong COMPETITIVE POSITION Weak

Sales Team and Selling Effort

Sales Channel: Field Selling andInside Sales

Selling Effort: Heavy

KEY TARGET

MAINTENANCE WHY BOTHER

Sales Channel:Major AccountPROGRAMS

Selling Effort:Heavy by Specialist Sales Channel: Direct Marketing,

Teleselling, and FieldSelling

Selling Effort: Heavy (best prospects)Low (other prospects)

Sales Channel: Inside Sales

Field Selling andTeleselling

Selling Effort: Moderate

Sales Channel: Teleselling,

Direct Marketing,and Some Inside

Selling Effort: Low


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* Better Understanding ofCustomers Needs

* Better Selectivity

* Better Selling Strategies

* Better Time & TerritoryManagement

TheSelling

Ballgame

Changing BusinessEnvironment

Leads to

Changing Selling

Environment

Resulting in

Harder to Get and Hold

Customers and It CostsMore!

Implications


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P ROCESS OF S TRATEGIC M ANAGEMENT

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FormulateStrategies

Objectives SituationalAnalysis

ImplementStrategies

CompetitiveAdvantage

Mission/Vision


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S ITUATIONAL ANALYSIS

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-External Environment

-Internal EnvironmentWhich one should be done first?

-Developing

Mission (?)Vision (?)


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EXTERNAL E NVIRONMENTS ANALYSIS

O pportunity: favorable environment for the organizationwhich it can take advantage of but is not in the control ofthe organization

Threat: situation potentially damaging to the organization

and is not under the control of the organization


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INTERNAL E NVIRONMENT ANALYSIS

Strength: Resources, capacity and capability for attainmentof goals

Weakness: limitation, fault and defect in the organizationwhich obstructs effective use of resources


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WHAT IS VISION ?

Type of organization aimed for tomorrow Dream to come true Visual and persuasive outline of theorganization goal that promotes the synergicuse of resources and capabilities


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VISION

Years ago, a modest entrepreneur had a fried dough traveling shop

on a crowded avenue. With his great creativity, he decided to install aluminous sign advertising and sell big and good quality fried doughs.This, together with his personal friendliness made a successfulbusiness. He was even able to send his kid to the University.When his son finished College and came back home, he told his

father: don't you realize the crisis ahead? control tightly your costsdaddy!.His father thought about it: My son has studied a lot and knows a lot.Perhaps he is right. He started selling smaller doughs, to actconcerned; he even removed the light advertisement from the shop in

order to save light. He slowly run out of business until he ended upclosing the shop.On his way back home, he still was thinking: My son was right!, a bigcrisis was indeed approaching my business! His Vision determined his behaviour and decisions.

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VISION

Often the vision we have from our Organizationdetermines our decisions and the actions we take ona daily basis.This tends to happen mostly in a unconscious way.Decisions like spend versus save, taking versusavoiding risks, sharing versus preserving, and manymore, are affected by the type of vision of ourOrganization. The port of destination tends to be

more relevant than we think and impacts on the way we travel .

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V ALUES

What are the values?Which ways of working do we considerconstructive and effective in ourorganization?Rules and procedures that describe thegeneral attitude and professional relations inour organization (EFQM*)

What are we known for? What does finalcustomer value or appreciate from ourorganization?

* EFQM: European Foundation for Quality Management 50


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V ALUES

Example:Open to changes in the sectorFocused on our customerOpen workplace, diverse and of mutual supportService quality/professional service

In a certain large chain of department stores, the value ofcustomer satisfaction is so relevant for their image and businessthat, when hiring new personnel (even for temporary o seasonalpositions) the training sessions start and are focused on value ofcustomer service, before even dealing with the specific trainingof the department or area for which the new employee is hired.This value and this way of working and communicating withcustomers has been the key to the success of the company

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N ATIONAL HEALTH S YSTEM - MEXICO

Vision: The National Health Program pursues the creationof a universal health system, fair, based on solidarity, plural,efficient, with high quality, preventive, decentralized,participatory and focused on development.

Mission: To contribute to a fair human development,inclusive and sustainable, through the promotion of health asa shared social goal and through the universal access tointegral high quality services that satisfy the needs and fulfillthe expectations of the population, as well as bringprofessional opportunities to health care providers, in a

framework of a fair resource financing and usage, transparentand efficient, with a wide citizen involvement.

Values: Fairness, person self-governing and shared socialresponsibility

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GROUP WORK

Please develop Mission Statement foryour Hospital

1. External Environment (Opportunity and Threats)

2. Internal Environment (Strengths and weaknesses )


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ENVISIONING

Nine Dots Problem Game


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GROUP WORK

Please do the situational analysis for yourhospital

1. External Environment (Opportunity and Threats)

2. Internal Environment (Strengths and weaknesses)


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Issues Impact on the Possibility of

Org/Programme continuing to next 3-5 years (1-10) (1-10)

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Keeping in view the impact of the points/ issues

identified in each category on your project, pleaserank all the issues (in each category separately) on thescale of 1-10 where 1is lowest and 10 is highest.


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Feasibility Analysis

Apply a list of criteria to all alternative

strategies

Identify one which satisfies most of the

criteria

F ibili C i i


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Feasibility Criteria

Criteria of feasibility Question Status of strategy (high, medium or low)S1 S2 S3 S4

Technological Is the technology developed enough?

Resource Are the necessary resources available?

Political Will there be strong opposition?

Ethical Is it consistent with prevailing values?

Administrative Can it be administered effectively?

Coast effectiveness Is it Cost effective?

Congruence Is it consistent with project objectives?

Speed/pace Will it achieve the desired outcome more rapidly


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S TEPS FOR T RANSLATING S TRATEGY INTO ACTION

Tasks to be CompletedTime-frame

Person ResponsibleResource NeededCosts

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